Sign in to comment!

Menu
Home

Three Banks Settle Suit Stemming from Enron Collapse for $6.6B

A U.S. judge Wednesday approved a $6.6 billion civil settlement by three banks accused by Enron Corp. shareholders of helping the company hide financial misdeeds that led to its collapse.

The settlements to be paid to former Enron shareholders include $2.4 billion from Canadian Imperial Bank of Commerce , $2.2 billion from JP Morgan Chase (JPM) and $2 billion from Citigroup (C).

U.S. District Judge Melinda Harmon gave preliminary approval to the settlement with the three banks in February.

Including earlier settlements with firms such as Lehman Brothers (LEH) and Bank of America (BAC), shareholders are now due to receive more than $7.2 billion of the $40 billion plaintiffs in the cases have claimed they lost in Enron's collapse.

The civil suit filed by shareholders against Enron, its banks and several former top executives including Ken Lay, Jeffrey Skilling and Andrew Fastow, is scheduled to start in October, according to lead shareholder attorney William Lerach.

Lay and Skilling are awaiting a verdict in their criminal trials on charges they lied to investors to hide financial chaos at the once-heralded energy company.

Lerach told reporters after the hearing that there was still no indication of whether several other banks included in the lawsuit would settle claims against them before the trial.

"It's radio silence at the moment," he said.

Lerach could not say when the payouts from the bank would reach shareholders, who watched their stock drop from a peak near $90 per share to zero with Enron's bankruptcy, but said the money would be paid "as soon as possible."

Interest of about $550,000 on the settlements was accruing on a daily basis, he said.

Those banks include Merrill Lynch (MER), Barclays Plc., Credit Suisse First Boston, Toronto Dominion Bank, Royal Bank of Canada and Royal Bank of Scotland.

Numerous shareholder lawsuits were filed, with the University of California being named lead plaintiff to represent the defendants.